Brisk export demand prevents further price cuts on German steel scrap market

Crane grab in front of a pile of old sheet metal and other obsolete scrap.
Increasing export prices led to a price differential
between the north and the south of Germany
22.10.2021 − 

After prices for ferrous scrap soared to record highs this past summer in Germany, a significant price correction occurred in August and September. At the beginning of October, it initially looked like prices would continue to soften. But then the export business picked up dramatically, so steel mills were largely unsuccessful in their attempts to achieve lower prices. Ferrous scrap traders now expect the price trend to move higher again in the coming months.

October was once again a month where it paid off for scrap traders to wait a while before engaging in negotiations with steel producers. In early October, the first prices called off by steel mills in Luxembourg and western Germany were significantly below the September levels. Buyers were demanding mark-downs of as much as €30 per tonne, according to market participants. Traders who signed their first deals at these prices came to regret their decisions, since the market situation changed completely within a few days.

Strong growth in exports to Turkey

European steel scrap exports to Turkey started slowly rising from the beginning of the month and then really took off from the second week of October onwards. In the previous two months, Turkish steel mills had only shown modest demand for scrap and, if they purchased at all, they preferred to source material in the USA. However, with a significant improvement in their sales markets and rising prices for billets and reinforcement steel, Turkish steelmakers now need considerably more scrap.

For German scrap traders, deliveries to domestic steel mills therefore became less and less attractive, so steel producers were forced to walk back their earlier demands for price cuts. Moreover, there is a price gap between the north and the south of Germany. Because they are competing with overseas exports, steel mills in northern Germany must pay more for scrap than their peers in the south. In addition, the Italian market is still not a good sales channel for scrap traders in southern Germany.

The full report on the German steel market appears in the print and e-paper issues of EUWID Recycling & Waste Management (22/2021) published on 4 November. Online subscribers can access the report including the price table here:

Steel scrap Germany

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